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DAX in 2019

2018 summary

2018 is done all ready and with just about few days left it is good time to look forward to new year and new opportunities.

We can call 2018 as year of the correction. Stocks fall significant after long Bull run with some instruments on edge of Bear market with some in all ready.

This correction started early 2018 and what we saw by rest of that year as continuation that move with peak in last quarter of 2018 when prices erase gains from about 2.5 years so far.

This correction even painful is welcome to maintain healthy market. Prices hovering near highs for too long create dilemma if investment is worth efforts to push further or actions cross line of euphoria.

Market is not place just for speculative trading and intraday but core is long term trading funds like pension funds and long term investors which are after not just prices but company value, price / value ratio get ballooned way too far what force reality check and tiger sell off.

Also political and economy events worked out in favour of sell off. With trade wars, tensions in EU block, rising interest rates we have situation supporting deleverage.

New Year new opportunities.

Perhaps we will see some echo from 2018 still spooking market. Lets not forget trend not reversing by magic wand touch but have to show some strength and support.

Lows have to prove them selves and withstand retests

Range bound trading and accumulation for building base can give chance at first for technical rebound in bearish trend what can lead to bullish trend resume if get supported right by buyers and news / events play in favour.

Range trading / accumulation can be bit boring for day traders as price will not rush to new tops but instead working on best average across positions. This process can take up to few weeks and revisit lows or near lows good few times.

Short squeeze can occur also, we had some interesting action after Christmas with price reach low just under 10300 to rebound fast and keep on absorbing pressure. Short squeeze from here would have to reach around 11200/300 zone but what next, this type actions just help get new shorts in for as fast retreat lower and volatile market.

Further decline lets be honest situation bit out of control all ready and in this fight human vs machine well human don’t stand a chance. Algos will stay switched on as long they make money and where we are now it is difficult to turn this around. No improvements, no big money flow in to market and price will grind way lower.

Maybe is over and time to buy but lets not be total naive, ending 10y Bull run in SP500 is even more impressive achievement for traders like taking another countless ATH why except they juts going to pack toys and go home?

Traders approach for 2019

We as traders have very difficult job now, old supports got erased so is much harder to foresee direction, we have to be open for many scenarios like range trading, retest lows, technical rebound rally, bearish rally and of course for breach current lows and push under 10k mark.

Right now keeping any sentiment away and be vigilant is in order even more like always. We can miss best entry or get hooked on hope.

Presence of quant funds and algorithmic trading, tensions in market create very difficult environment for us but guys we will crack it like always!

Wish you all best of luck and profitable 2019

Weekly charts

Buyers.

Buyers trying absorb sell pressure, perhaps create accumulation base for this formation to play technical rebound from 61.8 (10550) retrace towards 23.6
(12500) / 38.2 (11730) with all action below 10550 seen as buy dip opportunity.

One hand enormous opportunity for shopping on discount other hand difficult situation with short sellers in control and heavy in profit. Something special is needed.

Sellers.

Sellers not agree with job is done and push market under 10k mark

Presented on chart formation have 3 outcome, 1st rebound from 61.8 as buyers setup, 2nd retest base (higher low around 9500) or 3th reset it completely with new lows (8800 and lower)

There is good chance for rebound to adjust risk on open positions and take profits to reload on shorts either at 11.3 or 12.5 so price can rally a lot but still be under control of short sellers.

Only new ATH can be game over for Bears and that is “just” 3k+ points away

Last developments NEWS:

Volatility

Market still trying make sense from last days developments. Media quoting various strategists and analytics from financial institutions and quite often we can see world “unusual”.

What it means? Lets take for example DOW day before Christmas – 500p, day after +1kp and following day -500 with ending week at close around -200p . Roughly 2300p swing in just few days, far from stable and normal trading environment right?

All of that in period where month should be good for stocks but was worst since 1931 and historically quiet holiday period Christmas – Early January .

This could be buy dip action but also taking over new territory as much close to key support is possible we will know answers early January. That zone is place where Bear market about to begin for SP500 for example which follow same swings like mention above DOW.

Maybe is over and time to buy but lets not be total naive, ending 10y Bull run in SP500 is even more impressive achievement for traders like taking another countless ATH why except they juts going to pack toys and go home?

Available Liquidity

Order books are much thinner like in normal conditions what is not a surprise when market trading south only. Most of traders either sit tight on pile of cash waiting for situation to clear a bit or sell each rally using opportunity to create tax loss at EOY.

Danger of that situation is when large block of contracts have to be executed on sell side due less participants price can dip much lower comparing to other market conditions.

HFT also notice less activity and provide lower liquidity. No one seems want to step up and get run over.

Trump calling Xi

Great and so bad is too late, damage is long time done and market can rally on that hope or simply shrugged it off we will see reaction after weekend.

This time this guys did not make same mistake as after G20 and China confirm this talks in official statment

Is phone call good enough to sort issue, perhaps not.

News picks:


One Theory for the Giant Stock Rebound Is a $60 Billion Pension Frenzy

https://www.bloomberg.com/news/articles/2018-12-28/one-theory-is-60-billion-pension-frenzy-fed-giant-stock-rebound

European Stocks Trim Annual Loss With Biggest Jump Since April

https://www.bloomberg.com/news/articles/2018-12-28/european-stocks-climb-as-u-s-rebound-boosts-oil-mining-shares?srnd=premium-europe8

BlackRock, Capital Group and Pimco Warn of 2019 Risks

https://www.bloomberg.com/news/articles/2018-12-29/trump-says-big-progress-being-made-with-china-after-xi-call?srnd=premium-europe


Completely Bizarre’ Stock Moves Leave Traders Scratching Heads

https://www.bloomberg.com/news/articles/2018-12-28/-completely-bizarre-stock-moves-leave-traders-scratching-heads

Trump Expresses Optimism for China Deal With Ties at Crossroads

https://www.bloomberg.com/news/articles/2018-12-29/trump-says-big-progress-being-made-with-china-after-xi-call?srnd=premium-europe

If Dow breaks this level in first quarter, ‘watch out,’ says market bull Jeff Saut

https://www.cnbc.com/2018/12/29/if-dow-breaks-this-level-in-first-quarter-watch-out-jeff-saut-says.html

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